TaxTMI 
TaxTMI 
Clarification on proposal made by the Finance Bill, 2006
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....2. Additional duty of Customs 2.1 The 4% special CV duty, under section 3(5) of the Customs Tariff Act, 1975 which was imposed last year only on ITA goods and their parts/components, has been extended in general to all imports. It will apply to both agricultural and industrial products. This additional duty will not be included in the assessable value for levy of education cess on imported goods. Manufacturers will be able to take credit of this additional duty for payment of excise duty on their finished products. Articles of jewellery will, however, attract a lower rate of special CVD at 1%. 2.2 Some categories of imports, however, have been exempted from this special CVD. These are: (a) Goods exempt from VAT; (b) Goods exempted both from basic and CV duty (including CV duty exemption by way of excise duty exemption); (c) Petroleum crude, kero....
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....fractories, namely, natural graphite powder, aluminous cement, boron carbide, reactive alumina, silicon metal (99% purity), micro/fumed silica, brown fused alumina, fused zirconia, silicon carbide, sodium hexameta phosphate, sintered/tabular alumina and fused silica. 6. Mineral Products: Customs duty has been reduced from 15% to 5% on mineral products of Chapter 25, except for cement, marble, granite and asbestos. 7. Agriculture : 7.1 Concessional rate of 5% customs duty + Nil CVD, presently available to specified plantation machinery upto 30.4.2006, has been extended by one more year. 7.2 Customs duty has been increased from 30% to 60% on honey. 7.3 Customs duty has been increased from 30% to 80% on vanaspati, bakery shortening, inter-esterified, re-esterified, elaidinised fats, margarine and similar boiled, oxidized, dehydrated, sulphurised, blown, polymerized or modified preparations of edible grade, falling under headings 1516, 1517 or 1518. 7.4 Customs duty has been reduced on Atlantic salmon from 30% to 10%. 8. Information Technology: ....
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....p;Textiles 12.1 Customs duty on man- made fibres, filaments yarns and spun yarns has been reduced from 15% to 10%. 12.2 Customs duty on DMT, PTA, MEG and Caprolactum has been reduced from 15% to 10%. 12.3 Customs duty on Paraxylene has been reduced from 5% to 2%. 12.4 Customs duty on specified textile machinery, and parts for manufacture of such machinery, has been reduced from 15% to 10%. 13. Withdrawal of exemptions: Customs duty exemptions/concessions have been withdrawn on following items: 1) Subbed polyester base, for the manufacture of medical or industrial X-ray films and graphic art films. 2) Saddle tree. 3) Parts of outboard motors imported by specified agencies. 4) Spare parts for maintenance of textile machinery. 5) Videocassettes and video tapes imported by Television Centre of All India Radio, or by M/s Electronic Trade and Technology Development Corporation Ltd or by others. 6) Food preparations containing flour, meal, starch, etc. in a specified proportion meant for infant use and put up for retail sale. 7) Food products (excluding alcoholic p....
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....ectates, pectin esterase; Yeast; Pasta, whether or not cooked or stuffed or otherwise prepared. 15.6 Excise duty has been reduced from 16% to 8% on Ready to eat packaged food; Texturised vegetable protein (Soya bari); and Instant food mixes, namely, pongal mix, vadai mix, pakora mix, payasam mix, gulab jamun mix, rava dosa mix, idli mix, dosai mix, murruku mix and kesari mix. 15.7 Excise duty has been reduced from 8% to Nil on processed meat, fish and poultry products. 15.8 Concessional rate of 8% of excise duty applicable on scented supari with retail sale price (RSP) of 50 paise or less per pouch has been extended to scented supari with RSP of Re.1 or less per pouch. 15.9 Excise duty has been reduced from 16% to 8% on: (a) Heat resistant latex rubber thread. (b) LPG gas stoves (without any grill or oven) of value exceeding Rs.2000 per unit. (c) Compact Fluorescent Lamps. (d) Footwear of retail sale price between Rs.250 and Rs.750 per pair. For this concessional rate, the RSP has to be indelibly marked or embossed on the footwear. 15.10 Excise duty has been fully exempted on: (a) Paddy de-husking rice rubber rolls. (b) Nuclear gra....
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....ys track machines; 10) Mixture of graphite and clay for manufacture of pencils or pencil leads; 11) Aluminium ferrules for manufacture of pencils; 12) Tobacco used for smoking through 'hookah' or 'chilam', commonly known as 'hookah' tobacco or 'gudaku'; 13) Sulphur (2503 00 10), but sulphur falling under this tariff item for fertilizers will be exempt. [Note:Inallabovecases(16.1&16.2),exemptionuptoRs.1crorewould be available under the general SSI exemption scheme] 16.3 Excise duty has been raised from 8% to 16% on: 1) Mosaic tiles, 2) Glassware, 3) lay flat tubing; and 4) Cigarette filter rods. 16.4 The rate of compounded levy on stainless steel patti/pattas has been increased from Rs. 15000/- per machine to Rs. 30000/- per machine. 17. Small Scale Industry : SSI exemption available to power driven pumps designed for handling water has been restricted only to those pumps, which conform to prescribed BIS Standards. This will be effective from 1.4.2006. The annexure to SSI exemption scheme  ....
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.... (Rs. per 1000) 1 Not exceeding 60 mm in length 150 160 2 Exceeding 60 mm but not exceeding 70 mm 495 520 Filter Cigarettes 3 Not exceeding 70 mm in length 740 780 4 Exceeding 70 mm but not exceeding 75 mm 1200 1260 5 Exceeding 75 mm but not exceeding 85 mm 1595 1675 6 Other cigarettes 1960 2060 21. Information Technology: 21.1 Excise duty of 12% has been imposed on computers. 21.2 Excise duty of 8% has been imposed on packaged software on electronic media. 21.3 Excise duty of 16% has been imposed on set top boxes not covered under the Information Technology Agreement. 21.4 Excise duty on storage devices, namely, DVD-Drives, Flash Drives and Combo Drives has been reduced from 16% to Nil. 21.5 Excise duty on MP3 Players and MPEG4 Players has been reduced from 16% to 8%. 22. Export Oriented Units: Duty on clearances of goods to Domestic Tariff Area from Export Oriented Units, Software Technology Parks, Electronic Hardware Technology Parks etc. has been changed from 50% of aggre....
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....s or other beverages intended for use in aerated waters). 8) Mineral water. 9) Waters other than aerated and mineral waters, ice and snow, not containing sugar or other sweetening matter or flavour (2201 90 90). 10) Waters other than aerated and mineral waters, ice and snow containing sugar or other sweetening matter or flavour other than aerated waters or lemonade (2202 10 90). 11) Beverages containing milk (2202 90 30). 12) Other waters (2202 90 90). 13) Edible mixtures or preparations of animal vegetable or fats and oils (other than margarine and linoxyn). 25. Miscellaneous: 1) Provision has been made to charge excise duty only on value addition in respect of Glued insulating rail joints, if no input tax credit is taken. 2) Excise duty exemption available on raw materials for manufacture of rotor blades of wind operated energy generators, has been extended to all glass items (7019) and resin binders (3824 90). 3) Generic exemption to products of coir industry, cashew industry, tanning industry, oil mill and solvent extraction industry, and rice mill....
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..... This is a statement on revenue foregone. So far as revenue foregone from customs and excise duties are concerned, these have been prepared with the help of data made available by Directorate of Systems. But the data quality leaves much to be desired particularly in respect of excise duties. The Board desires that Commissioners should ensure that data on excise duties being furnished to Directorate of Systems are sent in time, and are correct, comprehensive and complete in all respects. I would request you to kindly ensure this as we propose to make the revenue-foregone statement more comprehensive and meaningful in the coming years. 29. Manufacture 29.1 Amendments have been made in the Central Excise Tariff Act to provide that certain processes carried out in respect of certain goods will amount to manufacture. These changes are indicated below. It may be noted that these changes come into force immediately. 1) A Note has been inserted in Chapter 25 to provide that in relation to products of heading 2515 and 2516, the processes of cutting or sawing or sizing or polishing of blocks or any other process of converting stone blocks into sl....
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....sp; However, in respect of certain licences, while fixing the export obligation, which is a multiple of CIF value of imports, instead of taking into account the actual Customs assessed value, the corresponding value of new capital goods was taken. Notification No.160/92-Customs dated 20.4.1992 is being amended retrospectively to provide that in respect of these licenses, the export obligation would be refixed based on actual CIF value assessed by Customs instead of the notional value of corresponding new capital goods. 4) Notification No.96/2004-Customs dated 17.9.2004 issued under DEPB Scheme expired on 30.9.2005 and subsequently, a new notification (No.89/2005-Customs date 4.10.2005) was issued to allow imports under DEPB Scheme without payment of customs duty upto 31.12.2005. There wa....
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....nt of title to imported goods is not available to the importer in case such goods are involved in any offence. 10) First Schedule to the Central Excise Tariff Act, 1985 is being amended so as to align it with the Customs Tariff Act, 1975 (CTA), in line with the amendments proposed in CTA with effect from 1.1.2007. 32. General 32.1 You may kindly study these changes carefully and indicate your views, comments and suggestions on implementation of the proposed changes. A survey may be undertaken to identify the potential taxpayers and the revenue potential. Reports to this effect may be sent by 31.3.2006. It is necessary to ensure that the implementation of the proposed changes is smooth and causes no inconvenience to the taxpayers. Special efforts should be made to guide the taxpayers to understand and adopt these changes. The Departmental Officers should also be appropriately briefed on these changes. 32.2 In a number of cases, excise duty rates have been altered. It has....